Rwanda focuses on eliminating Poverty

The Kigali Master plan: Economic growth in Rwanda is pointing to sustainable outcomes such as these

The Fourth Edition of the Rwanda Economic Update shows that swift and positive actions taken by the Government have successfully steered Rwanda towards a steady growth and positive outlook.

The report says that Rwanda’s economy has grown by a robust 8 percent in 2012, thus continuing a decade-long period of strong economic growth.

The growth has made Rwanda to claim for the third year in a row the title of the fastest growing economy in the EAC.

The report says that the strong growth in 2012 is attributed to a resilient private sector performance especially in the services sector with trade, telecommunication and transport generating about 40 percent of 2012 real GDP growth.

While the Ministry of Finance and Economic planning says that the economy was boosted by the booming services sector.

The Minister of finance Amb Claver Gatete says that there were fears that the economy would grow at a modest rate of 7.7 percent last year due to the sovereign debt crisis in Europe and concerns about the fiscal cliff in the US, as well as suspension of budget support by some donors over allegations that Rwanda was supporting the eastern DR Congo-based M23 rebels.

But the official final figures for last year indicated a strong economy and continued appetite for investors to pour in money.

“This was a check on whether we are a stable economy,” finance minister Amb. Claver Gatete simply noted while commenting on the 2012 figures in comparison to the then economic context.

The World Bank foresees a broadly positive outlook for Rwanda, with growth projected at 7 percent in 2013 and 7.5 percent in 2014.

“The aid shock has demonstrated not only the Government’s prudent macroeconomic management capacity, but also the vulnerability of the economy to the volatility of aid”, saysYoichiro Ishihara, World Bank Senior Economist for Rwanda.

This report uses data gathered by the statistics institute in Rwanda to examine the reduction in poverty and inequality in Rwanda over the past decade.

According to the report, the fraction of the Rwandan population living below the poverty line dropped from 59 percent in 2001 to 45 percent in 2011.

“Almost half of the reduction in poverty can be attributed to developments in agriculture, especially the increase in agricultural production and the increased commercialization of agriculture, witnessed by the rising share of harvests that are sold on local markets,” says a World Bank press release.

It asserts that diversification of livelihoods towards non-farm activities has been an important secondary driver of poverty reduction in Rwanda over the past decade.

“While Rwanda has pushed back poverty dramatically in the past decade, it is still one of the world’s poorest countries,” says Carolyn Turk, World Bank Country Manager for Rwanda. “We are happy to continue supporting Rwanda’s efforts to channel its impressive growth into shared prosperity for Rwanda’s citizens.”

According to the report, “further increases in agricultural productivity will likely be the main driver for poverty reduction in the decade to come, especially if combined with increased business activity related to the boom in agriculture”.

Currently for Rwanda, the main agricultural programs do not cover the entire territory, and substantial rewards could be reaped from scaling up these programs. In addition, given the importance of the rural nonfarm sector in terms of welfare and job creation, the report says that creating an enabling environment where informal household enterprises can thrive would likely to raise rural standards of living and play a significant role in absorbing the rapidly growing labor force.